Behind Online Pharma - all about prescription drugs, or imitations thereof, bought and sold online

About the project

Mon, 18 May 2009 18:37:16 +0100

About Us

We are 14 fellows from the 2009 class of the Toni Stabile Center for Investigative Journalism, part of Columbia University's Graduate School of Journalism.

In January 2009, we began posting blog entries as we learned more about the world of legal, illegal and questionable online pharmacy practices. Browse or search those entries on our news and blog index page: http://behindonlinepharma.com/news/.

Learn more about the program at stabilecenter.org.

Connecting to consumers

Fri, 15 May 2009 22:29:54 +0100

Pharma Express

Connecting global unregulated drug supplies with American consumers

by Emily Witt and Malia Politzer

Type Georgios Xydeas’ name in an Internet search engine and the first items that come up are press releases announcing his federal indictment, conviction and sentencing for trafficking in counterfeit pharmaceuticals. But scroll to the bottom of the page and advertisements still remain for Xydeas’ erstwhile company, Evgen International.

On business-to-business Web sites like AliBaba.com, Bizearch.com and GlobalBusinessResource.com — the virtual bazaars of the global market — the ads promote Xydeas's inventory in cosmetics, perfume and medicine and list his former address and phone numbers in Panama. The phone numbers are no longer active, and Xydeas is now in jail, but the ads are reminders of a once-robust business in trafficking prescription drugs online.

Xydeas is Greek, his customers were American and his business partner Egyptian. His headquarters were in the free trade zone of Colon, Panama. He is an example of a new kind of global middleman: a conduit to transport drugs made in Europe and Asia to customers in the U.S. who want prescription drugs without the prescription. He and dozens of others like him can be found through the simplest Internet searches.

According to law enforcement officials, court documents and Internet research, these middlemen offer a full-service fulfillment service for online pharmacy startups. Contracted by Web site administrators operating online pharmacies to fill their customers’ orders, these providers ensure a steady supply of pharmaceuticals — often diverted from legitimate channels or counterfeited in potentially unsafe conditions — and deliver them securely to the American consumer.

In February 2009, Xydeas pleaded guilty to distributing counterfeit Cialis, an erectile dysfunction drug, to the U.S. market. He received a reduced sentence in exchange for providing information to the Feds, presumably about his suppliers in China and Europe. In addition to Cialis, Xydeas regularly filled orders from online pharmacies for Ambien, Ativan, Valium, Xanax and Phentermine, no prescription required.

Express mail pharmacies

Xydeas may now be in jail, but Internet searches reveal many others in the same business, operating in plain sight. Often referred to as drop shippers, they purchase drugs in wholesale quantities from manufacturers and collect retail orders from online pharmacies. Then they repackage the drugs and ship them directly to customers. The drugs are most often unregulated and sent in discreet packaging directly to the customers through FedEx or other direct mail. Most drop shippers will guarantee that a package intercepted by customs will be resent at no charge.

“These people will ship products from one market to another,” said Dr. Bryan Liang, executive director of the Institute of Health Law Studies at California Western School of Law. “They collect the stuff and they resell it to someone else.”

The business is all but uncontrollable from a customs standpoint. “You would have to work faster than the speed of light to check all these packages,” Liang said.

Court records reveal that at least one major drop shipper was supplied directly by drug manufacturers in China, but one pharmaceutical investigator said that most have diverse sources of drugs, including hospitals and pharmacies in any number of countries, particularly those with weak intellectual property laws.

It is illegal to import pharmaceutical drugs into the U.S. without going through the proper channels, but because most drop shippers are overseas, they operate beyond FDA and DEA jurisdiction. They are very difficult to prosecute because of the shifting nature of the trade. Drop shipper distribution chains are constantly evolving, exploiting poorly regulated areas like free trade zones in Panama or Dubai.

“This is an international problem,” said Mike Russo, a spokesperson from the pharmaceutical company Eli Lilly. “People that engage in these criminal enterprises move to where there’s least resistance to their products.”

While the drugs may be approved for sale in their countries of origin, their passage through illegitimate channels makes their quality difficult to verify.

Type "drop ship pharmaceutical" in an Internet search engine and it will bring up dozens of companies that openly sell prescription drugs ranging from Viagra and Cialis to Lipitor and Prozac.

A scattershot path around the globe

In mid-January 2007, a student in Philadelphia took what he thought were a couple of Xanax, purchased from an online pharmacy supplied by Georgios Xydeas. Instead of the anticipated sedation, however, the pills provoked a disconcerting twitchiness.

According to court documents, the student was disturbed by what he later described to emergency room personnel as his “jerky” involuntary motions and decided to go to the University of Pennsylvania hospital.

After he outlined the sequence of events — and admitted that he had purchased the Xanax online with no prescription — hospital personnel suspected that he had been given not Xanax but Haldol, a powerful antipsychotic used to treat schizophrenia.

The student handed over the drugs, which the FDA then tested. The laboratory found Holperidol, the active pharmaceutical ingredient in Haldol. An investigation began. By February, the FDA had located other online pharmacy shoppers who had purchased Xanax but received Haldol. At least one also turned over an envelope with a postmark from Greece.

The FDA issued a public alert online to warn consumers, with photos of the envelope and its return address in Greece. One cheated customer forwarded the alert to the online pharmacy where he had bought his supposed Xanax. The site operator, who would later serve as a federally protected witness, went to his supplier, Georgios Xydeas.

Xydeas moved much of his operation to a free trade zone in Panama, where bulk drug purchases are often whitewashed from their origins and repackaged to make them appear more legitimate. The government sought the help of Eli Lilly, the manufacturer of Cialis, and began a concerted effort to catch him. An undercover agent from Eli Lilly contacted Xydeas through a business-to-business Web site and arranged a wholesale purchase of counterfeit Cialis.

When Xydeas landed in Panama for a meeting to finalize the deal, he was turned away at Customs and put on a plane back to Greece that was routed through New York.

In New York, Xydeas was arrested.

The U.S. Attorney's Office in Denver, which prosecuted the case against Xydeas, touted their success in breaking up an international drug ring that stretched all the way to China, according to U.S. District Attorney Troy Eid.

But only a glancing search online shows that there are many businesses like his, operating in the open with relative impunity. Type "drop ship pharmaceutical" in an Internet search engine and it will bring up dozens of companies that openly sell prescription drugs ranging from Viagra and Cialis to Lipitor and Prozac. While advertised as brand name, pharmaceutical company representatives said they are far more likely to be counterfeits or illegal generics — if they contain any active pharmaceutical ingredients at all.

Do-it-yourself

Customer service representatives — easily reachable via Skype and email — offer advice to anyone on how to start online pharmaceutical companies, and do not require their clients to have prescriptions, pharmaceutical licenses or other credentials.

One customer service representative at the company — PharmaDropShip.com — even provided a list of “best selling drugs” and instructions on how to start an online pharmacy to undercover reporters, even when we made clear we had no experience, expertise, or certification in pharmaceuticals.

When we asked in an Internet chat whether we needed to provide prescriptions in order to buy controlled substances, PharmaDropShip.com customer sales representative Simon Owen wrote, “No you don’t,” adding, “my advise [sic] is to sell everything.”

The business model used by PharmaDropShip.com nearly duplicates Xydeas’ business model as it was described in court records. According to the Skype conversation with Owen, PharmaDropShip.com has been doing business for more than eight years, filling as many as 1,500 orders a day.

The site essentially offers a complete fulfillment service to online pharmacies serving American users. Website administrators send spreadsheets of their orders to an online database, where they are then retrieved and filled by the drop shipper. According to Owens, the drugs are mailed from countries ranging from India, to Germany, Seychelles, the U.S., U.K., France and Holland — reflecting, perhaps, the wide network of suppliers. The drugs are packaged discreetly and sent directly to customers.

Pharmadropship.com does not check the licenses or certifications to verify that pharmacies they ship to are legitimate, nor do they require buyers to provide prescriptions before shipping drugs directly to customers within the United States, or verify that drugs go through proper FDA channels.

Owens maintains that all this is perfectly legitimate.

“I’m not an importer, so I don’t need to answer import laws,” he said in an Internet chat, adding that they are not responsible for the actions of their customers.

A new paradigm of global trade

Patrick Ford, a senior director for global security at Pfizer, described the role of drop shippers as something like launderers of pharmaceutical drugs. (Pfizer manufactures Viagra and Lipitor, two of the most counterfeited drugs in the world.) In a hypothetical situation he outlined, the origins of a drug manufactured in China or India could be completely hidden by the time the product arrives in the hands of a consumer.

According to Ford and Liang, a drop shipper might receive a quantity of drugs from China or India and ship them on a pallet to Free Trade Zones in the Caribbean or the Middle East. There, the drugs might be repackaged into consumer-ready envelopes, boxed, and trans-shipped to somewhere with a postmark more credible to the Internet consumer —London or another European city. The origins of the drug are obscured, and a consumer who reacts poorly has little recourse.

“It’s not like Pfizer, which only deals with licensed wholesalers in a closed supply chain,” said Ford. “There is no product complaint department.”

As the easy availability and openness of the drop shipping trade reveals, law enforcement is now caught in a game of catch-up.

Online pharmacy watchers say that even generics can be counterfeited, contain no active pharmaceutical ingredients, or be otherwise compromised when they are shipped through illegitimate supply chains.

In the early 2000s, most of the online pharmacies were still U.S. based, drawing on a small pool of corrupt pharmacists. According to John Praed, of the Internet Law Group, those pharmacists were relatively easy to catch. After aggressive enforcement, the pool was soon diminished.

“The market for ethically challenged pharmacists dried up,” Praed said.

But demand remained higher than ever, and the rise of viable pharmaceutical manufacturing in India and China made offshore suppliers more plentiful. The drop shippers filled a market niche, aided by the business-to-business websites that emerged with the rapid globalization of the economy in the 1990s. The problem, of course, was that the drugs looked different.

Ford said that the most savvy counterfeiters could be determined by the quality of the packaging they used for the drugs.

But even that might change. When we expressed worry that pharmaceutical consumers might be put off by receiving drugs that were obviously from India, one drop shipper assured us that wasn't true. People that buy on the Net, he wrote in an Internet chat, are very familiar with Indian drug companies.

While it’s true that there are legitimate drug manufacturers in India — some licensed by the FDA to supply generics to the legitimate U.S. supply chain — online pharmacy watchers say that even generics can be counterfeited, contain no active pharmaceutical ingredients, or be otherwise compromised when they are shipped through illegitimate supply chains.

Court records indicate that online pharmacy suppliers can be less than scrupulous when it comes to filling their customers’ orders.

Liang emphasized that because online pharmacies offer lower prices, it is often uninsured Americans who face the greatest risks: “I really could care less if trademarks are violated by the existence of these drugs,” Liang said.

“I care if people get killed.”

PharmaDropship.com: One of many sites that can help you set up your online pharmacy shipping warehouse.

(Click on image to see full page.)

PDF Download: Click here to read more about how dropshippers operate, through the case of Eli Lilly Vs. 8PM Pharmacy in the UK.

Intro

Fri, 15 May 2009 17:19:26 +0100

Introduction: From Mumbai to Riga to New York

Tens of thousands of Web sites sell prescription drugs online.

Some of these sites are legitimate operations and enable seniors and other groups to buy reasonably priced medicines. But a large percentage of them allow customers to obtain controlled drugs without the required prescriptions.

These “rogue” Internet pharmacies comprise a multibillion dollar, global industry that is constantly evolving as it plays a cat-and-mouse game with law enforcers and government regulators.

A few years ago, these rogue operations were mainly based in the U.S. In October, Congress passed the Ryan Haight Act, which explicitly prohibits the online sale of prescription drugs in the U.S. without at least one in-person doctor visit, building on earlier legislation that regulates controlled substances. But it's become increasingly difficult to crack down on the rogue Internet drugstores because many of them are based overseas and often beyond the reach of U.S. law.

“They’ve become much more sophisticated,” said Carmen Catizone, executive director of the National Association of Boards of Pharmacies.

“Their drugs come from outside of the U.S., so there's less likelihood of them being caught or identified here.”

Today a shadowy, transnational network of illicit drug manufacturers, traders, doctors, Web site operators, spammers and criminals makes up the online pharma world.

From January to May 2009, our investigative reporting class tried to penetrate that world. We ordered and received generic Prozac — shipped from India — from what appeared to be a rogue site. We then tracked the opaque purchase transaction to see who was behind it.

“It generally would be a small group of people who are basically making all this work,” said Steve Wernikoff, an attorney with the Federal Trade Commission who has brought charges against illegal Internet pharmacies.

“They’re hiring the spammers, they’re arranging for the products to be sent, they're arranging for the Web sites to be set up.”

They also work out the payments through the credit card system.

Our reporting also examines the complicity in the business of drug manufacturers as well as drop shippers, middlemen who transport drugs across the globe.

We documented the cases of doctors who signed off on thousands of prescriptions for patients they had never met. And we took the pulse of domestic and international law enforcers to see who is winning the battle against rogue e-pharma.

The Stabile Investigative Class of 2009

The rise and fall of Christopher Smith

Thu, 14 May 2009 17:42:22 +0100

The Rise and Fall of Christopher Smith

The making of an online pharma king

by Ana Azpurua and Hilke Schellmann

When Christopher William Smith landed at the Minneapolis-St. Paul International Airport in the early morning of June 30, 2005, the FBI was waiting for him.

Smith, known in cyberspace as “Rizler,” was one of the world’s most prolific spammers. The 25-year-old had also sold thousands of tablets of prescription painkillers through a rogue online pharmacy that he operated.

Smith could have eluded the law had he remained in the Dominican Republic where, law enforcers say, he was intending to move part of his business. But he returned to Minnesota. After all, everyone he ever cared about was there.

“He came home because his wife and his family were here,” said Chris Smith’s father, Scott. “He was under the impression that nothing he had done was illegal.”

In May 2005, the government initiated a series of civil and criminal cases against Smith. His assets were frozen and his Minnesota business was shut down after he was charged with wire and mail fraud. In August 2007, a jury found him guilty of running a criminal enterprise and sentenced him to 30 years in jail.

Prosecutors said that from early 2004 until May 2005, Smith had amassed over $24 million by running an illegal online pharmacy.

Smith’s Internet operation was a 21st-century crime. From court documents and interviews with law enforcers, prosecutors, experts and Smith’s father, we were able to reconstruct how a young, ambitious computer whiz from a middle-class family used the Web to run an immensely lucrative business that allowed him to afford a lavish lifestyle that included luxury cars, fancy accommodations and a trophy mistress.

Smith had never met some of his key employees, nor had he ever spoken to them on the phone. He communicated to his staff via email and online chats. One of his accomplices, Bernardette Hollis, known as the “Spam Queen,” was operating from her house in Kansas, while Smith lived in Minneapolis.

Most of Smith’s business was run from the United States. His companies, Xpress Pharmacy Direct and Online Payment Solutions had their headquarters in Burnsville, Minnesota. He worked with Philip Mach, a doctor licensed in New Jersey, who issued prescriptions that were filled and shipped by American pharmacies.

Smith had also begun to expand his business abroad. He was planning to set up an Internet drugstore in Montreal, Canada. After his Minnesota headquarters were raided, he also tried to open a new online pharmacy in the Dominican Republic.

In a questionnaire we sent Christopher Smith via his father Scott, he said he was on vacation in the Caribbean and did not intend to do business there. But in a civil case against Smith prosecutors said he was attempting to set up shop overseas.

Government investigators and experts fear that Smith’s planned overseas expansion is part of an emerging trend in the online pharma business.

“They’ve become more sophisticated,” said Carmen Catizone, executive director of the National Association of Boards of Pharmacies, a trade organization.

“Their drugs come from outside of the U.S., so there’s a less likelihood of them being caught or identified here.”

“They’re trying to get away from using U.S. pharmacies,” Catizone added, “and use more of these foreign distribution centers where they mailed drugs into the U.S.”

"He always pushed the edge, pushing everything as far as he could."

The early years

From his boyhood, Christopher Smith showed extraordinary talent with the computer. His father recalls how the boy often sat on his lap observing while he worked on his computer.

“By the time he was four he was already starting computers and booting them up, and playing with them,” Scott Smith said.

When Smith was five, his father was seriously injured in a car accident. A year later, his parents divorced.

“That had a huge impact on the kids, Christopher and my daughter Corbin,” Scott Smith said.

In the early 1980s, he owned successful restaurants in Minnesota. After the accident, he made millions from a company that sells diaper-changing stations. Scott Smith traveled all over the world with his children because he thought that would show them what they could have if they work hard.

Christopher started making money early. He cleared the snow from his neighbor’s driveways and sold mini-donuts at church fairs, Scott Smith said. At age 16, Christopher opened a car-radio store in one of his father’s offices in Canon Falls, Minnesota.

“From the business point of view he was always good,” Scott Smith said. “But he always pushed the edge. Pushing everything as far as he could to get by with it. And so I think that’s part of the problem that he ran into with his business.”

When he was 17, Smith met his wife-to-be Anita, who was then 21. They moved in together and four years later, they had a son. Smith opened his first Internet marketing company in the late 1990s, during the early years of his relationship with Anita.

Soon, the high school dropout was making thousands of dollars filling inboxes with junk emails selling sexual enhancement drugs and college diplomas, according to Spamhaus, an organization which tracks the world’s top spammers. One of the world’s most prolific spammers had been born.

By 2003, Smith’s spamming activities attracted the attention of AOL. Smith sent millions of spam messages to AOL affiliates between January and August of 2003, according to court documents filed in 2005. The company sued Smith in Virginia for sending unwanted email.

Christopher Smith’s passport.

He also used aliases in other identification documents.

(Source: Spamhaus.org)

PDF Downloads:
The FBI's Indictment against Smith
A list of Smiths' forfeited cars
The verdict

The online drug business

With his spamming activities under surveillance, Smith ventured into a new business: selling prescription drugs online.

“One of his friends said he was doing an online pharmacy and making all kinds of money,” Scott Smith said his son told him.

In the beginning, Smith imported drugs from India. But after facing problems with overseas shipments, he sought out struggling independent pharmacies throughout the U.S. to fill his orders. But these pharmacies required prescriptions, so Smith hired Dr. Philip Mach to write them. Court records say that Mach took the job because he had money problems after a messy divorce.

Smith’s online pharma operation had multiple Web sites that required customers to fill out a questionnaire and state the medication they needed. But the information customers provided was never verified and Mach never saw any of his online patients face to face. Smith paid Mach $3.50 for every order he approved and turned into a prescription.

“These pharmacies would access Web sites that were part of the network that Christopher Smith had organized, and they were able to download prescription orders from those websites,” said Carmen Catizone. “They would simply then print the labels, they would put the medications in the bottles and in the bags and then ship them to patients.”

To promote his business to U.S. consumers, Smith ran a telemarketing office in Burnsville, Minnesota and also in the Dominican Republic, the Philippines and Canada. Xpress pharmacy also publicized its services through Internet search engines and television ads.

Smith’s operation eventually had about 80 employees. These included a New York accountant, Bruce Lieberman, who was chief financial officer, and Daniel Adkins, who acted as the in-house general counsel.

Another employee, Darrell Griepp, acted as the pharmacy coordinator. Griepp was tasked with finding more brick-and-mortar drugstores to fill the orders. (When we tried to contact Griepp by phone, he said: “Do not call this number anymore,” and hung up.)

Smith's business was going well, but its success soon attracted attention.

The fall of Christopher Smith

As the millions came pouring in, the 25-year-old flaunted his success. He bought an extravagant new house for himself and his wife Anita. He also began an affair with a former stripper and took her on expensive trips overseas, according to former FBI agent George Kyrilis, who investigated the case.

Smith rented an upscale office in Burnsville for his online pharmacy and call center business. Smith owned more than a dozen luxury cars, including two Ferraris, two Jaguars and two Hummers. A chauffeur drove him to work in a Mercedes Maybach, one of the world’s most expensive cars.

Kyrilis said the end began when a lawyer who worked in the same office building noticed the young man being driven to work in a chauffeured Mercedes. The lawyer also noticed that some of Smith’s former employees seemed out of place in such a well-appointed office. After all, some of them were former convicts. The lawyer alerted a friend who was working at the FBI.

The FBI looked into Smith’s business and soon realized that it wasn’t legit, Kyrilis said. The Internal Revenue Service and the Food and Drug Administration joined the probe and soon, a full-scale investigation was underway.

"Quite literally they were getting these printouts that were flying from their printers. They literally couldn’t keep up.”

The operation unravels

In February 2005 the Drug Enforcement Administration issued a directive warning pharmacies that “it is illegal to receive a prescription for a controlled substance without the establishment of a legitimate doctor/patient relationship, and it is unlikely for such relationship to be formed through Internet correspondence alone.”

When the drugstores that had been filling the prescriptions for Xpress Pharmacy expressed their concern about the DEA directive, the company sent them false assurances that its business was legal. It claimed that it had physicians in all states, that its questionnaire was DEA approved and that doctors were conducting face-to-face patient consultations.

This was far from true. Xpress Pharmacy had just one doctor, Philip Mach, who was issuing prescriptions – as many as 1,500 in a single day, prosecutors would later allege. The drugstores filling those prescriptions were swamped.

“Quite literally they were getting these printouts that were flying from their printers,” said Elizabeth Peterson, one of the prosecutors. “They literally couldn’t keep up.”

It was not difficult to prove that Smith sold drugs online without patients never seeing a doctor. An undercover FBI agent simply bought prescription drugs from one of Smith’s websites. As the investigation progressed, Smith tried to move his business operations to Montreal. He also put his luxury cars under false names in storage facilities in Minneapolis.

Cornered by the government

In May 2005 the law enforcement team felt they had enough evidence against Smith’s pharmacy and went to court. A judge issued an injunction for operating an online pharmacy that defrauded consumers. The court froze $18 million in assets and shut down the online business. Days later, Smith traveled to the Dominican Republic.

Law enforcement agents feared he had escaped. But to everybody’s surprise he returned to Minnesota. Law enforcers found out about his impending return because his wife’s new lover tipped off the IRS, agent Kyrilis said. Smith was arrested at the airport for violating his injunction order.

In September 2006, Smith was released to a halfway house but he smuggled a laptop into his room in violation of the agreement with the judge. He was then sent to Sherburne County Jail north of Minneapolis.

“Smith never slowed down. He continued like the energizer bunny,” said Kyrilis, who added that Smith’s operations gave his task force headaches.

While in jail, Smith tried to outwit his captors. He called a lawyer, and because calls between lawyers and clients are privileged, correction officers could not listen in.

"Just let her know... we’re going to give her the option of picking which one of her kids she’s going to sacrifice."

Smith dialled a lawyer's phone number that was no longer in use. He then re-routed the number via VoIP, which allows phone calls over the Internet. Whenever Smith told the guards that he wanted to talk to his lawyer, he would actually call his associate Roanna Cleofe in the Philippines, court documents said.

The authorities eventually found out about the fake number and started to listen in. In one call, Smith talked about threatening a key witness in the trial, his former accomplice, Bernardette Hollis.

Hollis was a doting mother with prodigious computer skills. She programmed the online pharmacy for Smith. When law enforcement agents raided her house in Kansas, she opted to cooperate with the authorities.

“She is the key that unlocked the case,” Peterson said. With Hollis’s help, agents were able to decrypt the online transactions and unravel how the business operated.

In March 2006, during one of his supposed phone consultations with his lawyer, Smith talked about killing one of Hollis’s daughters: “Just let her know that, you know, if she wants to talk on the stand, that’s perfectly fine, but we’re also going to give her the option of picking which one of her kids she’s going to sacrifice for doing so.”

Smith's father did not dispute that his son said these words, but he explained that at that time Christopher had been in solitary confinement and had not been taking medication to treat his bipolar disorder. Scott Smith claimed that his son was angry because Hollis and other close associates were cooperating with the government, but he never meant harm.

At trial, prosecutors accused the 25-year-old of running a “continued criminal enterprise” (CCE), a serious offense which carries a minimum sentence of 20 years and is usually applied to those involved in drug cartels. The case against him was one of the first times that the CCE charge was applied to someone dealing with prescription drugs.

“Chris Smith was never more than a drug dealer with a criminal enterprise,” Peterson said. “He operated like a typical kingpin."

"Instead of dealing his drugs with dealers on the street, he dealt them on the Internet,” she said.

On August 1, 2007, Christopher Smith was found guilty by a jury. The judge handed down one of the longest sentences anyone involved in an online business has ever faced: 30 years.

“The significance is that it was the first case in which a person was convicted, who is not a pharmacist or a doctor,” Peterson said. “This was the first case that we were able to charge as a conspiracy.”

Smith is appealing his case. His former associates — Hollis, Mach and Griepp — collaborated with the government and got either probation or sentences of less than three years. Smith's company accountant and lawyer were acquitted.

Kyrilis said that catching Christopher Smith was only possible because they knew where he was.

“We were lucky," he said. "Our case started with an office in Minnesota. Now these guys are overseas and use aliases and fake names.”

Smith, 25, shown here in his Minnesota Driver's License,

had a collection of luxury cars.

(Source: Spamhaus.org)

Laboratory Lottery

Thu, 14 May 2009 17:38:46 +0100

Laboratory Lottery

Where do online pharmaceuticals come from?

by Emily Witt and Malia Politzer

When GenericPharmacy.bz opened for business in 2002, its Web site claimed the Viagra, Ambien, Xanax and other drugs sold came from Canada and were manufactured under the best of conditions. It claimed prescriptions would by approved by a doctor after customers completed an online questionnaire.

But court records and media reports tell another story of GenericPharmacy.bz, PlanetPharmacy.bz, GenericViagra.bz and other domains owned and operated by a Norcross, Georgia-based company, Hi-Tech Pharmaceuticals, and its proprietor, Jared Robert Wheat.

In February 2009, Wheat was convicted to four years in prison and forced to forfeit $4 million in profits for manufacturing and importing illegal counterfeit pharmaceuticals.

According to federal court records, Hi-Tech Pharmaceuticals was supplying its online pharmacies not with Canadian drugs, but with knock-offs cooked in nonsterile conditions in a four-room house in rural Belize.

Wheat ordered active pharmaceutical ingredients for the drugs he sold from China through a company based in New Jersey. He had a blender, dyes, and packaging sent to the house in Belize. He printed out recipes and set up shop. He raked in millions of dollars in sales.

Wheat’s Central American pill factory is no longer in business, but evidence shows that there are many other bootleg pharmaceutical enterprises operating with the same ease. In the world of illicit online pharmacies, perhaps the only consistent expectation a consumer can have is that his purchase will not come from a legitimate U.S. purveyor of pharmaceutical drugs.

Federal records of online pharmacy busts indicate that drugs bought online can come from almost any source imaginable, but most suppliers are offshore.

Law enforcers and investigators from pharmaceutical companies say drug suppliers can range from small-time operations such as Wheat’s to legitimate manufacturers, but knowing a drug’s true provenance can be nearly impossible for the online customer.

While drug company investigators say China and India are the largest manufacturers of counterfeits, illegal generics, or fake drugs, the means to manufacture pharmaceuticals are easily available to almost anyone. Counterfeit operations to manufacture popular drugs have been found in Peru, Colombia, Nigeria and other countries as well.

According to Bryan Liang, the executive director of the Institute of Health Law Studies, a brisk online trade exists in pill presses, blister packs – even the raw chemicals needed to produce a drug.

“If you search on AliBaba.com you can get 55-gallon drums of this stuff,” said Liang, referring to active pharmaceutical ingredients.

Search “active pharmaceutical ingredient” and 337 hits come up on AliBaba.com. A search for sildenafil, one of the active ingredients in Viagra, turned up 206 hits. Of those companies, 187 claimed to be located in China or India, and most claimed to provide the raw ingredient in quantities of a single kilogram or in 25-kilogram drums.

Patrick Ford, a senior investigator with Pfizer and a former FBI agent said that he has encountered bootleg operations where the manufacturers used everything from boric acid to brick dust to chalk in their operations.

In one often-cited case from December 2006, Marcia Bergeron, a 58-year-old resident of British Columbia, died of acute metal toxicity from anti-anxiety pills she had ordered online. Media reports stated that Canadian and American government investigators found Bergeron had purchased the pills from an Eastern European-based online pharmacy. The pills themselves were suspected to come from Southeast Asia and had contained aluminum, titanium and tin.

There are other hazards as well. Even drugs manufactured under the best conditions could be improperly stored or have passed their expiration date. According to the WHO, half of all drugs purchased over the internet fail tests for active pharmaceutical ingredients. A drug’s efficacy goes beyond the active ingredient, however.

“It’s not just the active pharmaceutical ingredient, but a drug has to have an identical molecular structure so it’s digested correctly,” Liang said.

Investigators have found less-than-sterile conditions in backyard factories, such as this pill packager in China.

(Photo courtesy of Pfizer)

Hi-Tech Pharmaceuticals was supplying its

online pharmacies not with Canadian drugs,

but with knock-offs cooked in a four-room

house in rural Belize.

E-pharma Affiliates

Thu, 14 May 2009 17:37:32 +0100

Everything is Online

How You, Too, Can Become an E-pharma Affiliate

By Erin Siegal

In a YouTube video clip dated May 19, 2008, Shahab Akhavan stares straight into a webcam, unsmiling. He’s wearing glasses and his dark hair is neatly covered by a Yankees cap.

Although the young man’s lips have been moving from the video’s start, the sound kicks in almost four seconds later. Akhavan’s voice is slightly accented.

“I just ordered some medication from this online pharmacy,” he says, slowly.

“I was surprised at how soon I received it. I recommend it… for the people…”

His voice trails off and the clip abruptly ends.

According to his Facebook and LinkedIn profiles, Akhavan is a 26-year-old Jewish Iranian-American living in Los Angeles, California.

He’s gone on a birthright tour to Israel and likes hiking on the weekends. What these online profiles don’t say is that Akhavan is an online entrepreneur who puts up Web sites that sell a range of goods and services, including prescription-only drugs.

Posting videos on YouTube is one way some Web entrepreneurs like Akhavan market products and drive traffic to their sites. Akhavan is the registered owner of both anti-anxiety-pills.net and online-discount-pharmacy1.com, two sites that advertise the sale of prescription drugs without the need for a face-to-face consultation with a physician.

A search on DomainTools, a database of Web site name registrations, shows he owns 25 other domains, including bestcreditrates.net, a credit card rate comparison site, and loansandinsurances.com, which provides debt settlement, credit repair and loan help.

Akhavan declined and then would not respond to repeated requests for an interview by phone, email and Facebook message. But he has left digital footprints that attest to his various business activities. Over the past year, for example, he has posted some 50 YouTube clips using the monikers “Shahab6” and “Bijan814.”

About a quarter of these videos were related to online pharmacies and buying drugs online. Akhavan's clips, which he both starred in and narrated, direct users to his sites by listing the pharmacy’s URL within the text of each video’s description. Drugs mentioned include Soma and Tramadol, painkillers available in the United States via prescription only.

Advertisements for prescription drugs are subject to federal oversight via the Food and Drug Administration’s Prescription Drug Marketing Act of 1987. By regulating how drugs are marketed, the FDA is supposed to protect consumers from “counterfeit, adulterated, misbranded, sub-potent, or expired drugs.”

John Mack, the editor of Pharma Marketing News/Pharma Marketing Blog, said that placing promotional videos on YouTube skirts regulations.

“It's a good way,” he said, “of keeping ads that violate FDA regulations alive.”

YouTube video posted by user Bijan814 on May 18, 2008.

(It has since been taken down, but we saved a copy.)

Press the "Play" button

Shahab Akhavam

(Click on image to enlarge)

(Source: Facebook, February 27, 2009)

‘Rogue’ Site Affiliates

Shahab Akhavan’s sites, anti-anxiety-pills.net and online-discount-pharmacy1.com, are both e-pharma affiliate sites. Their role is to funnel retail orders from customers to larger Internet pharmacies.

In Akhavan’s case, these larger online pharmacies are RxPayouts.com and RxCash.bz, which LegitScript, a widely known online pharmacy verification Web site, describes as “rogue” sites. LegitScript states that so-called "rogue" sites violate or appear to violate U.S. laws, use “fraudulent or deceptive business practices," or do not follow the accepted standards of safety and pharmacy practice established by the National Association of Boards of Pharmacy.

In December 2008, LegitScript worked with domain name registries to shut down 500 rogue pharmacy websites. And RxPayouts may be next.

“RxPayouts is one of the largest rogue affiliate networks in the world,” said John Horton, president of LegitScript. “And RxCash.biz is in the top ten of about 150 to 175 affiliate networks.”

Horton estimated that around 50,000 rogue online pharmacies like Akhavan’s are operating at any given time and that affiliate sites make up roughly 98 percent of all Internet pharmacies.

“Most of the affiliate site owners understand what’s going on,” he said. “But because they’re not the ones actually handling or shipping the drugs, they pretend it absolves them of responsibility.”

By becoming affiliates, webmasters like Akhavan are afforded a relatively quick and simple way to cash in on a slice of the e-pharma cyber-pie.

Affiliates sites operate by collecting commissions on the sale and delivery of drugs, which are activities performed by the larger sites. No prior knowledge of pharmacology, medicine or doctors is needed. No identification is required. No address is needed.

“All you have to do is complete our very simple Registration Form and you can start making money right away!” is the summary provided on RxCash.biz’s FAQ’s page.

According to the online FAQ’s of both RxPayouts.com and RxCash.biz, affiliates set their own prices, create their own shipping charges and utilize a ready-made infrastructure including credit card processing, pharmacies and doctors, and around-the-clock customer support. Both sites entice potential affiliates with a possible 60 percent revenue share.

A working email address is all that’s needed to set up shop as an affiliate, which the Behind Online Pharma investigative team did. Within 24 hours, we were approved to become an affiliate of both RxPayouts.com and RxCash.biz. The only information we were asked to supply was a name, email address and geographic location.

The approval email sent from RxPayouts.com contained directions on how to log into the larger site’s “Admin Interface” to create a potential backend of a new e-pharma affiliate site. Instructions were given on how to set up the business, and templates were available for download. The process of registering and starting up as an affiliate can be done in less than a day.

Dima, who did not provide a last name, is the Cyprus-based affiliate manager for RxCash.biz. Via Skype, he explained that he personally approves new affiliates.

“I have affiliates making close to $10,000 a month, and I have some not making even a hundred,” he said. “It depends how much and how hard you work.”

"Your ignorance is not going to save you.

It’s going to condemn you.”

Within 24 hours, we were approved to become an affiliate of both RxPayouts.com and RxCash.biz (above).

(Click on image to enlarge)

Template options for an e-pharma affiliate site.

(Click on image to enlarge)

No Prescription Needed

On the front page of Akhavan’s site, online-discount-pharmacy1.com, one line is on prominent display: “No prior prescription needed.”

Along the side of the page, a long list contains both prescription and nonprescription drugs available for purchase.

To buy medication, customers use a standard online shopping cart. They then click through to a “secure transaction server” hosted by cartadmin.com and are asked to enter a credit card number and address.

Customers are also asked to fill out a brief medical query, which asks questions such as whether the medication has been taken before, whether the customer has had a physical exam within the last 12 months, and if the customer is being treated for any other condition. According to the online-discount-pharmacy1.com customer service team, the questionnaire goes on to be reviewed by a “licensed U.S. Doctor.”

But when asked about the doctors, customer service representative Holly refused to identify any. Daniel, another rep, said that a “board” licenses the site’s anonymous doctors yet he wouldn’t specify which board. Marcus, a third rep, said that the FDA licenses the doctors. Additionally, none of the reps would name which “U.S. pharmacies” actually filled orders placed through the site.

“There are no doctors,” countered LegitScript’s Horton. “Most affiliates don’t even know where the drugs are coming from."

Jon Praed, an attorney specializing in cybercrime, says that affiliate owners like Akhavan can and should be held responsible for their role in promoting the business of rogue online pharmacies. If the larger sites required all affiliate owners to verify their identities, he said, there would be a clearer path to accountability.

“Affiliates certainly can be held responsible for the acts of the larger pharmacies,” Praed said. “If they [larger sites] can’t do it, their agents [affiliates] can’t be allowed to do it. It’s negligence by proxy.”

He added that even if affiliate owners don’t fully understand the workings of the sites they’re linked to, they can still be held legally liable for willful recklessness, negligent enablement and flat-out criminal responsibility.

“The question’s not what they know, but what they should know,” said Praed. “Your ignorance is not going to save you. It’s going to condemn you.”

It’s unclear just how much Shahab Akhavan knows about the larger Web sites that provide his affiliate income.

In one of his YouTube videos, dated April 22, 2008, he explained the difference between legit and illegitimate methods of obtaining prescription drugs.

“There are people who import drugs illegally from India and Costa Rica, either through drop shipping to the U.S. or through bulk, and pick up the package and distribute them,” he explained. “That is illegal.”

He went on to explain that buying Schedule III, IV and V drugs online if one has a “medical record, doctor’s consultation on the phone, and follow up” is legal.

Yet Dima, the affiliate manager for the site fulfilling orders from Akhavan’s anti-anxiety-pills.net, says those purchasing drugs online never communicate with a physician.

“In this business, customers don’t ask to see the doctor,” he said. “Everything is online.”

Shahab Akhavan’s online pharmacy:

online-discount-pharmacy1.com

(Click on image to enlarge)

YouTube video posted by user Bijan814 on April 22, 2008.

(It has since been taken down, but we saved a copy.)

Press the "Play" button

Enforcers take on rogue pharma

Thu, 14 May 2009 03:05:50 +0100

Our Project

Thu, 14 May 2009 00:10:38 +0100

Introduction: From Mumbai to Riga to New York

Tens of thousands of Web sites sell prescription drugs online.

These “rogue” Internet pharmacies comprise a multibillion dollar, global industry that is constantly evolving as it plays a cat-and-mouse game with law enforcers and government regulators.

“They’ve become much more sophisticated,” said Carmen Catizone, executive director of the National Association of Boards of Pharmacies.

“Their drugs come from outside of the U.S., so there's less likelihood of them being caught or identified here.”

Today a shadowy, transnational network of illicit drug manufacturers, traders, doctors, website operators, spammers and criminals makes up the online pharma world.

“They’re hiring the spammers, they’re arranging for the products to be sent, they're arranging for the Web sites to be set up.”

They also work out the payments through the credit card system.

Our reporting also examines the complicity in the business of drug manufacturers as well as drop shippers, middlemen who transport drugs across the globe.

The Stabile Investigative Class of 2009

Doctors feel the pain of online pharma crackdowns

Wed, 13 May 2009 19:07:57 +0100

Say Ahh! Doctors Feel the Pain of Online Pharma Crackdowns

A legal precedent makes e-prescribing even riskier for physicians

By Olivia Andrzejczak

Dr. Christian Hageseth III was in dire financial straits and running out of employment options. His medical license had been suspended. His attempts at gaining employment and then at entrepreneurship had failed. So he turned to the Internet, finally, in January of 2005: he signed a yearlong contract with JRB Health Solutions, an online pharmacy site and affiliate hub owned by Benjamin Kreis.

“A lot of people don’t believe it, but I actually had a very altruistic thing in mind,” Hageseth said in a recent interview. “If I could’ve practiced medicine in any other way, I would’ve.”

Just two days after he signed the contract, Hageseth, who had been a practicing physician for more than three decades, already had a number of prescription orders awaiting his approval. Kreis was on a schedule.

“I will tell you that I like to get out all orders that come in before 3:30 p.m. C.S.T.,” Kreis wrote Hageseth in a brief email on January 27, 2005, shortly after the doctor had signed up. “So if I could have all orders approved by that time it will be greatly appreciated.”

“For the most part,” Kreis further advised, “the orders are relatively simplistic and will not require phone consultation, but I do appreciate your commitment.”

Hageseth’s contract stipulated he would make $6.00 per reviewed prescription, whether he approved it or not. His work entailed logging on to JRB’s secure Web site and reviewing patient files and their responses to an online questionnaire. He then either declined or filled the prescription by electronic signature. During his stint with JRB, Hageseth reviewed more than 10,000 orders.

Some of the orders were simple, especially if the same individuals ordered the same medication regularly. “That’s a pretty quick review,” Hageseth says, adding that he limited himself to drugs he knew would not be fatal in overdose. “Others I would have to sit back and cogitate – but of course there’s not much information – I might take five minutes or so.”

Such has been the prevailing model for most online pharmacies, where facelessness and anonymity are the preferred standard. Web sites flash slogans such as, “Maintain confidentiality!” “No physical exams!” or “No embarrassing doctor’s visits!” Among all of those involved in an online pharmacy operation, it is the doctors issuing prescriptions who have given the entire operation medical legitimacy – or at least a semblance of it.

How did Hageseth feel doing it?

“Cautious,” he says. But he was out of a job after all, and driven, he says, by the millions of uninsured persons in the US. “Was the Internet perfect?” he asks, “No, but it was an attempt to make a difference. It goes back to this: 71 million people can’t afford to see the doctor. They’re getting no care. None.”

Sometimes the stakes are perceived to be high enough (or the situation dire enough) for physicians to willingly dilute the doctor-patient relationship. But with a federal crackdown on online pharmacies that has landed a number of doctors huge fines and some of them multiple-decade jail sentences, it is unclear how many more doctors will find the risk worth the reward.

What’s just as fuzzy, though, is how much rogue online pharmacies actually need physicians around – if at all.

The Crackdown

While issuing prescriptions over the Internet is not illegal per se, in recent years, federal regulators and attorneys general have begun going after online pharmacies which boast that no doctor’s visits are needed. According to the Diversion Control website of U.S. Department of Justice’s Drug Enforcement Administration (DEA), more than 150 physicians have been investigated, arrested and prosecuted since 2003 for violating the Controlled Substances Act, which regulates the manufacture, possession and distribution of certain substances, including narcotics. Of these cases, dozens of physicians were prosecuted for cooperating with an online pharmacy.

The Web site www.internetdruglaw.com, run by criminal defense attorney David R. Cooley, says more than 40 doctors have been indicted for violating the Controlled Substances Act by filling prescriptions for online drugstores. In nearly every case, doctors pleaded guilty. Their sentences have ranged from five months to 30 years in prison.

In 2005 Dr. Salvatore DeFrank, a podiatrist, was sentenced to 41 months in jail and two years of supervised release after he was charged with prescribing 59,990 units of the Schedule III drug Hydrocodone and Schedule IV drugs Alprazolam and Phentermine to customers of the online pharma site www.1stmeds.com.

In March 2006 Dr. Mario Alberto Diaz was charged with helping an online drugstore distribute 70,000 units of Schedule III and IV substances. Diaz claimed to have read patient questionnaires and responded to patients via email or phone before prescribing medication, but was charged with a felony count of money laundering and sentenced to 30 months in prison in addition to the forfeiture of more than $200,000 he made from the transactions.

Dr. Juan Antonio Ibanez, a pediatrician, amassed more than $85 million from a network of e-pharma sites he operated from 2003 until December 2007. He was charged with conspiracy to distribute drugs and money laundering after he used his DEA registration number to issue more than 74,000 units of Hydrocodone. Ibanez also hired physicians from Texas, Ohio, North Carolina, Georgia, Louisiana, and recruited and paid numerous independent pharmacies all over the US. He was sentenced to four years and three months in prison in 2008.

In 2008, the National Center on Addiction and Substance Abuse (CASA) at Columbia University found 365 Web sites either advertising or offering controlled prescription drugs for sale online. Of these, 185 sites did not require a valid prescription – meaning that in the overall scheme, doctors weren’t even a consideration.

"The Internet is international, and people will then be obtaining their prescriptions from Thailand, India, China, Mexico, and God knows where else."

Real Space vs. Cyberspace

“There’s going to be a consequence if this case – this precedent case of mine – will bring about a stopping of U.S. physicians providing these prescriptions,” says Hageseth, whose April 2009 sentencing is the latest, if not the gravest, in online pharmacy litigation. His case is the first involving a jurisdictional battle over whether prescribing via the Internet is akin to practicing in a given state without a medical license.

“The Internet is international,” he continues, “and people will then be obtaining their prescriptions from Thailand, India, China, Mexico, and God knows where else. But they will not be getting FDA-approved drugs, the pharmacies will not be registered pharmacies, and the physicians – if any – who review the medical records will not be U.S. physicians.”

A Vietnam veteran, Hageseth was a well-respected psychiatrist in Fort Collins, Colorado. But in 1995, he developed affectionate feelings for a psychiatric patient. Although, according to Hageseth, he stopped treating her and they eventually got married, the Colorado Medical Board revoked his license in 1999 for what it said was sexual misconduct. After two years, the Colorado Court of Appeals overturned the Board’s decision and reinstated his license with the restriction that he only practice ‘administrative medicine.’

Although Hageseth was forthcoming about the complications with his license, JRB Health Solutions took less than four days to approve his application when he applied. In a January 24, 2005 email to Kreis, Hageseth wrote, “…I have had a significant problem in the past. I understand that you may not want to contract with me in view of the past matters of my professional life…”

A day later Kreis responded, “I think you would be a very wonderful addition to our company, as I did not find any issues with situations that have occurred in the past.”

It went smoothly over the next couple of months. On at least two occasions, Hageseth said, he received written thanks from individuals who said that, by issuing them antidepressants, he had saved their lives. He estimated he made about $60,000 in nine months, with a prescription denial rate of roughly six percent.

Things took a very different turn that summer.

"A lot of people don’t believe it, but I actually had a very altruistic thing in mind. If I could’ve practiced medicine in any other way, I would've."

MP3 audio

Christian Hageseth describes why he became an online pharmacy prescription writer. (2 min 16 sec)

Dr. Christian Hageseth III as seen on his personal website (http://www.christianhageseth.com)

Dr. Christian Hageseth III’s mugshot in 2009, when he was charged with a felony offense.
(Source: San Mateo County Sheriff’s Office, http://www.cbs5.com)

(Click on image to enlarge)

On June 11, 2005, 19-year-old John McKay visited www.usanetrx.com, an online pharmacy affiliate of JRB Health Solutions, and placed an order for 90 capsules of Fluoxetine. This generic form of Prozac was delivered to his residence in San Mateo, California.

Roughly two months later, on August 2, McKay was found dead in a car in his garage; a hose had been connected between the exhaust pipe and the driver’s side window. He had self-inflicted knife wounds on his arms and had left, on his laptop, a suicide note. The coroner said the cause of death was combined carbon monoxide and ethanol intoxication, but Fluoxetine was present in his bloodstream.

The McKay family sued Hageseth, Kreis and other partners of the pharmacy scheme for wrongful death, on grounds that the illegitimately supplied antidepressant caused their son to commit suicide. The civil case was dropped against all parties after medical experts and a San Mateo County judge found the drug had played no role in the young man’s suicide.

But the Medical Board of California began a criminal case against Hageseth for having practiced medicine in California without a California medical license. The Board contended that, by issuing a prescription via the Internet, Hageseth was practicing medicine in the patient’s state of residence .

San Mateo County Deputy District Attorney Jennifer Ow agreed: “The victim was in California and California law has the right to protect its citizens. I recognize he was never here, but he was prescribing medicine to someone here.”

But Hageseth’s attorney argued, “What if you live in one community and you drive to a doctor in a different state. Is your doctor committing a felony? If Hageseth is found guilty you are instantly retroactively making thousands of doctors into criminals.”

In the end, the court ruled, “It makes no difference that the charged conduct took place in cyberspace, rather than real space.” Last month, Hageseth was sentenced to nine months in jail and ordered to pay a penalty of $4,200 to the California Medical Board.

Although Hageseth said his cooperation with an online pharmacy was a financial advantage at the time, “as it has evolved, it has been a financial disaster beyond disasters.” He said he can no longer pay to the mortgage his house and has had to borrow more than $55,000 from friends and relatives. “My wife and I live from paycheck to paycheck, and have required the generous help of friends and family to literally survive. With respect to that it wasn’t worth it. With respect to the fact that I know two people are alive today because of what I did, that does give me some satisfaction,” he says.

He already has plans for after he completes his sentence. He has revamped his personal Web site and announced his founding of Depression Care Access, Inc., a nonprofit that aims to provide financial assistance to uninsured individuals suffering from depression.

“I’m pretty darn committed to it because I’m not going to let my life on this note,” he says.

Meanwhile, the online pharmacy network set up by JRB Health Solutions is still up and running, looking for affiliate sites and – for now – U.S. doctors.

Affiliate sites are “reseller” websites set up to drive traffic to another, “main,” “anchor,” or “spider” website. Owners of these sites receive compensation for each order placed by a customer who has clicked the affiliate’s link. Read more about how affiliate sites work here.

A photograph of John McKay, the Stanford student who committed suicide in 2005. (Source: www.sfgate.com)

(Click on image to enlarge)

A letter from David McKay

David McKay, the father of John McKay, wrote this letter in response to our article on some of the circumstances surrounding his son's death. We felt his contribution would add to the story, and have posted it here.

Thank you for the opportunity to clarify the facts of the civil wrongful death complaint filed by the family of John McKay against the online pharmacy participants, which you have described in your article.

First, the family was not arguing that the drug caused the suicide (although it does carry a FDA-mandated black box warning due to its documented significant risk of enhancing suicidiality in adolescents). The civil complaint argued that there was egregious, intentional professional negligence on the part of the physician and internet pharmacy group, due to their failure to provide the diagnosis and therapeutic intervention mandated by current standards of medical practice, and that the consequence of their negligence was failure to deter a suicide that likely could have been prevented.

There were three groups of defendants in the lawsuit: the physician (Christian Hageseth), the pharmacist Frank Gruich, and the Internet group headed by Benjamin Kreis. The Internet pharmacy group settled out of court. The presiding Judge Maxine Chesney dismissed the case against the pharmacist, and the pharmacist only, based on her opinion that he could not be held liable if it could not be proved that the death was a direct consequence of the toxicity of the drug. The plaintiffs felt this was a flawed judgment, and filed a motion to appeal, at which point the pharmacist settled out of court.

Judge Chesney did not dismiss the case against Christian Hageseth. In a written opinion, she stated, "With respect to Hageseth, plaintiffs have submitted sufficient evidence from which a reasonable trier of fact could find Hageseth's psychiatric treatment of John fell below the standard of care applicable to psychiatrists, as a result of Hageseth's not 'conducting a full psychiatric exam, a suicide risk assessment, an evaluation of his medical history, an evaluation of his substance use history, working to establish a therapeutic alliance, coming up with a treatment plan based on the psychiatric evaluation and other information and risk factors, and then arranging appropriate follow-up care as a result of that evaluation" (see Derish Decl. Ex. M at 4-15; Derish Decl. Ex. L (Scott Dep.) at 107:14- 22), and that if John had been provided appropriate treatment, his suicide "would have been prevented." [U.S. District Court for Northern California case 3:06-cv-01377, Document 267, pp. 6-7].

Christian Hageseth refused to respond to the civil suit, and eventually he was dismissed from the case by the plantiffs' attorneys in order to allow the civil and criminal cases to proceed without cross-interference.

All drugs that require a prescription have significant medical risks; if they did not, the FDA would re-classify them for over-the-counter sale. Reviewing responses to a short online questionnaire, and verifying only that the credit card information on it is valid, does not constitute a legitimate diagnosis. (In passing, I will mention that after my son's death, I submitted a request through his JRB account for a refill of his Prozac prescription; it received physician approval within hours, even though he was deceased).

Providing prescription drugs under such circumstances will predictably lead to harmful outcomes in a significant fraction of cases, as it did with John McKay, and as it is doing in other cases I am aware of through people who have contacted me wanting to know how to address the problem. I do not believe that any significant fraction of the responsible medical community would concur that such under-diagnosis is preferable to no diagnosis at all.

John McKay paid $60 for his Prozac prescription; legal discovery revealed the wholesale cost to be about $3. With a profit margin exceeding 90 percent, it is clear that the sole purpose of online pharmacies that do not require a valid prescription is to generate income for the participants, regardless of any claims to the contrary.

When I was young, a hypothetical scenario my friends and I would occasionally pose to each other was: "If someone told you pressing a button might harm or kill someone on the other side of the world, and then offered you a million dollars to do it, would you do it?"

It was a disturbing moral dilemma, since we all knew that the combination of a possible large payoff and anonymity of the consequences would be very tempting. Unfortunately, we have members of the medical community – individuals who have taken an oath to do no harm – who are willing to press a computer mouse button to approve prescriptions for anonymous patients, without concern for possible harmful consequences, for just a few dollars.

It is a practice for which we should have zero tolerance.

Sincerely,
David McKay, PhD
Professor (Emeritus), Stanford University School of Medicine
Research Professor, University of Colorado, Boulder

Tracing the Path of our Drugs

Wed, 13 May 2009 18:59:11 +0100

Tracing the Path of our Drugs

How a Packet of Prozac Took Us on A World Tour

By Kristina Peterson, Jake Pearson, Danielle Douglas, Rhiannon Coppin and Hilke Schellmann

To peek into the world of rogue online pharmacies, our class decided to become a customer. We purchased drugs without a prescription in the hope of uncovering who might be running this transnational trade. Tracing that purchase took us on a far-flung world tour as we followed how the drugs—and our money—crisscrossed the globe.

Our purchase of generic Prozac slipped past the watch of numerous regulators tasked with preventing this kind of trade, including customs and postal agents, internal bank monitors and credit card processors around the world. While we were never able to pinpoint the merchant’s precise identity, we were able to trace the purchase’s global arc.

The drugs were purchased on a computer in New York City, shipped from a pharmacy in India, processed by a bank in Latvia and may even be connected to a network of Russian cybercriminals. Our purchase also showed how the rogue online pharmacy industry is supported and enabled by illegitimate and legitimate businesses alike.

Our online drug purchase began on March 26, when we logged onto the Web site http://www.ypills.com and ordered 20 pills of generic Prozac. We chose to buy from this site after seeing it advertised on a YouTube video. In order to buy the drugs, we simply filled out an online questionnaire. At no point did we have to produce a valid prescription or speak to a physician. In short order, we were buying the pills with a Capital One Visa credit card. Strangely, we did not receive any sort of confirmation e-mail until roughly 10 days later, when we received an email from the "Canadian Pharmacy Support Team" informing us that our drugs were on their way.

Roughly five days later, we received a package shipped through India Post and the United States Postal Service containing our drugs -- plus two Viagra pills thrown in for free -- wrapped in a sheet of the Bombay Times.

The accompanying customs slip said the drugs were a "sample for trade" and the box for "a gift" was checked in blue pen. A purple rubber stamp listed the sender as Pratham Pharma, Shop No. 8, Surusha Apartment, V.N. Purav Marg, Chunabhatti (East), Mumbai in India. Pratham Pharmacy did not return multiple phone and e-mail requests for comment.

Pratham Pharma is located in the Lokmaniya Complex in Mumbai. Although the company’s name matched the one on our return slip, it had a slightly different address. Online, the company is listed as a medical supplies business, but we could not ultimately determine whether it makes its own drugs or simply supplies them. Sandwiched between two major highways, Pratham Pharma is situated in a cluster of five nondescript buildings, near several technical colleges, as seen from Google Earth.

After receiving our drugs from Pratham Pharma, we had them tested by Alliance Technology, a New Jersey laboratory. The lab found fluoxetine hydrochloride in the pills we got from India. “The capsule we tested does appear to contain the active ingredient in Prozac®,” said Dr. Jonathan Chun. In other words, we actually received a prescription-only drug through the mail.

International mail like ours is processed at one of the United States Postal Service’s 14 postal gateways, located in cities such as New York or San Francisco. There, postal inspection agents, including the law enforcement arm of the USPS and Immigration and Customs Enforcement agents, can flag and inspect suspicious packages.

There are certain "profile characteristics" that usually raise alarms, said Peter Rendina, national public information officer and inspector for U.S. Postal Inspection Services .

“When someone is trying to send something illegal, they tend to want to be anonymous,” Rendina said.

But our package did not display the traditional red flags -- it had a return address and there were no misspellings or protruding wires. However, the customs form stated clearly that the package had been shipped from an Indian pharmacy and oddly, was labeled “a gift.” Nonetheless, the pills seemingly breezed through customs and postal agents’ scrutiny. Though federal agencies told us they have strict standards, our purchase’s easy journey to New York suggests the system may be more porous than they think.

The Internet can enable members of the e-pharma network to remain anonymous and elusive. Regulators are still adapting to how the Web changes the cat-and-mouse game.

Rendina said his agents are increasingly using the Internet in their investigations. “There is always a trial back to somebody, using IP addresses or hits on websites,” he said. We also decided to use a similar approach.

Following the cybertrail

In our own cybersearch, we unearthed connections between our purchase and suspicious organizations like the Russian Business Network. The cybercriminal organization links to rogue online pharmacies by sending out spam and programs spiked with viruses, according to a 2008 report by Cisco Iron Port Systems, an online security company.

We started with four clues: a Web site domain (ypills.com), a phone number (1-800-383-7433), an email address header (vdsking3.ispvds.com), and another Web site domain that was printed on our credit card bill (RX-CS7.COM).

By performing a name and IP lookup on the three available domains, we were led to registrars and IP hosts in New York, the Grand Cayman Islands, Irkutsk, Prague, and Moscow.

We also came up with several names for registrants: Isai Wayne, Max Schultz, Peter A Svistunov, Alexandr Brukhanov, and Andrey Smirnov.

Unfortunately, name, address and phone numbers are all voluntarily reported. Anyone can hide himself with a pseudonym or impersonate another in the information listed with their domain, according to Danny Watson, an analyst at Spamhaus.org, a nonprofit that tracks spam.

"It could be a completely made up name. It could be that its the name or address of a relative of the spammer -- we've seen that in the U.S. quite a bit," Watson said.

The IP address linking to the domain (RX-CS7.com) on our credit card bill connected to a group of Moscow-based IP addresses supposedly managed by someone also called Andrey Smirnov. Smirnov, a name that repeatedly pops up in our searches, has been identified as being part of the Russian Business Network, according to various spam-tracking experts.

The Russian Business Network deals in rogue online pharmacies and was responsible for the “Canadian Pharmacy” spam operation, according to the Cisco Iron Port Systems report. Watson warned that the network may have dissolved. But its members are likely still operating independently or even further under the radar.

Georgian officials and security experts blamed the Russian Business Network for either launching or enabling politically motivated Internet attacks on Georgian government Web sites and communication networks according to an August 2008 Wall Street Journal article.

Researchers at Hostexploit.com, an open-source research group, published a 2008 report that names Alexandr A. Boykov and Andrey Smirnov as "hacktivists" who launched the attacks on Georgia.

"Nord Bank is likely doing something differently or failing to do something that other banks throughout the world are doing to drive these allegedly illegal merchants out of their customer base."

E-commerce: tracking our purchase

We also wanted to follow the money behind our purchase. So we called Capital One. It took almost an hour on the phone with seven employees before a supervisor of the credit card's fraud department was able to provide us with the unique identification numbers for our purchase.

The crucial 23-digit reference number for our transaction provided us with a six-digit bank identification number tucked into the second through seventh digits. Using the Mars Bank Database, a free downloadable software program, we were able to determine that the acquiring bank in the transaction -- the middleman connecting the merchant to the credit card -- was JSC Pirma Banka. The bank, which later changed its name to Nord Bank, is located in Riga, Latvia.

Nord Bank has surfaced frequently in investigations of suspicious online pharmacies, said Jon Praed, a cybercrime attorney. That likely means either multiple merchants are funneling their transactions through Nord Bank, or one very busy merchant is doing a lot of business with them, he said.

"It's not a coincidence," Praed said. "The fact that so many sales are going through Nord Bank indicates that Nord Bank is likely doing something differently or failing to do something that other banks throughout the world are doing to drive these allegedly illegal merchants out of their customer base."

Merchants find other ways to stay anonymous throughout the transaction. For instance, no one ever picked up when we dialed the 1-800 customer service number listed with our credit card purchase. A Google search of the 1-800 number yielded dozens of customers, complaining that they had been scammed. And Capital One noted that, unusually, the merchant identification number was all zeroes.

The merchant has an incentive to remain invisible -- obscurity makes it harder for consumers to watch out for potential fraud. Some banks take action to protect against merchants with bad intentions, like MasterCard’s Member Alert to Control High-Risk Merchants (MATCH) program. When either an acquiring bank or a transaction processor terminates a contract with a merchant, the merchant and its principals are supposed to be reported to the program, which publishes a list of the high-risk merchants.

But the system is flawed. The MATCH list is only as strong as the data that banks and transaction processors provide it: if they don't report problems, then the list is incomplete. Asked about our purchase, Nord Bank said our complaint was the first they had heard of. Spokeswoman Teika Lapsa said Nord Bank planned to end its agreement with the merchant, who does business with the bank as part of a large group. However, Lapsa would not disclose the identity of either the merchant or the broader group. The bank regularly inspects its merchants and requires them to comply with credit card regulations, Lapsa said.

"We can't check everything," she said of suspicious transactions. "We cannot avoid [it] 100 percent."

"The accompanying customs slip said the drugs were a 'sample for trade' and the box for 'a gift' was checked in blue pen. A purple rubber stamp listed the sender as Pratham Pharma."

We bought some pills from a Christmas-themed site, Ypills.com, in April.

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Two Viagra pills were thrown in for free with our order of 30 Prozac pills.

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The mail arrives: A brown envelope, and generic-looking pills wrapped in an Indian newspaper.

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This isn't Prozac -- but is it at least the right stuff?

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I'm your pusherman...How Washington doc doled out hydrocodone online

Tue, 21 Apr 2009 14:37:52 +0100

When the DEA suspended the drug registration of Peter Pfeiffer on Monday, the agency said the Bellingham, Washington-based physician had illegally provided hundreds of people across the country 34,400 doses of hydrocodone via the Web. Federal agents claim Pfeiffer allowed customers to fill out an online questionnaire and provide unverified medical records to request the drug.

Pfeiffer was able to get away with issuing so many prescriptions because there is no cap on the number of prescriptions that doctors can issue in a given period. Arguably there shouldn't be, as this may hinder patients from legal access to controlled substances. But at the same time, this lack of regulation allows someone like Pfeiffer to prescribe a Schedule III drug like candy.

From the UN, a view of the global online pharma trade

Mon, 20 Apr 2009 05:00:00 +0100

In an interview, Gisela Weiser, an expert from the UN Narcotics Control Board, answered questions about a global survey that her office has been undertaking sincce 2004. The survey assesses how different countries are dealing with illegal online pharma.

Which countries are producing most of the drugs?
Legally, there are a number of large manufacturers in Europe (Germany, France, UK, Ireland, Italy, Switzerland, etc) the United States, Canada, India, China and a number more. It really depends on the substance. Illegally, it is more difficult to say but there were indications for countries in Asia but also in Central America.

Which countries host the majority of illegal pharmacies?
This is impossible to say as they tend to shift. Illegal Internet pharmacies are opened and then relocated to avoid detection. For a number of years, there were quite a few in the U.S., the Caribbean, but also in Asia. When the U.S. tightened control they relocated.

A Diverting Issue

Fri, 17 Apr 2009 05:00:00 +0100

Question: what is the only major drug that is available as a natural, harvested product? If you said marijuana, you'd be right. All other drugs have to be produced or manufactured, according to the DEA's Diversion Control Program. So when chemicals are being shipped to companies that want to turn them into legitimate medicines, the DEA makes sure they actually get there and not...diverted...along the way.

And in an effort to provide transparency, the DEA Website posts the applications when pharmacies or people register to receive shipments of controlled substances. The site also shows if their applications are approved. Sorry, Lyle E. Craker, Ph.D.! His application to become a bulk manufacturer of marijuana was denied. Craker has since filed an appeal, which will be considered later this spring.

Finding doctors for online pharmacies

Sat, 11 Apr 2009 22:30:08 +0100

How do online pharmacies find doctors to work for them?

Apparently, it's not that hard. Online forums, for one, allow online pharmacy owners to make an open call for doctors. One such forum is http://rxaffiliateforum.com/index.php.

A posting on the site by eckox, Junior Member, reads a follows: “I have the capital on hand looking for doctor to review and pharm to fill and ship orders to start a legitment OP PM me if any one has some help.“

Yolanda, Junior Member, posted: "Looking for a doctor to review, non controlled orders only. 95% are Tramadol, Butal. and Soma. US doctor needed. to start asap.” Tramadol, Butal and Soma are all painkillers. They are not controlled drugs but still require a doctor's prescription.

Over the years, several doctors have been indicted for making out prescriptions for online pharma clients who only have to fill out a questionnaire and are not required to see a doctor in person. These prescriptions are then sent to brick-and- mortar pharmacies that supply the drugs.

I wonder if anyone has actually found a doctor online who is willing to work for an Internet drugstore? Any information is welcome. Contact me through this site if you have something to add.

Family blames online pharmacy for mother's drug addiction and death

Tue, 24 Mar 2009 19:55:33 +0100

California’s 17KGET.com news site covered an interesting story this week about how a Bakersfield family blames their mother’s death on addiction to painkillers that she repeatedly re-ordered online without a prescription.

On Friday, police told Jerry Clearwater that his wife had died after losing control of her car and hitting a tree.

“I still can't believe that she's gone,'' he told reporters. ''I’ll never see my wife again.”

Although the corner's office said it could take eight to 10 weeks to determine if 44-year-old Laura Clearwater had drugs in her system at the time of the accident, Jerry Clearwater “blames the crash and his wife's death on her addiction to the prescription drugs she bought online.”

Clearwater said a doctor originally prescribed a muscle relaxer for a back injury his wife had suffered while skiing.

Six months later, with an expired prescription and apparently addicted, his wife “started ordering the muscle relaxer Soma from an online pharmacy called myrxbill.com,” Clearwater said.

She never saw a doctor and every week more pills arrived at the family’s doorstep

The president of LegitScript.com, a website recognized by the National Association, told 17KGET.com that he knows myrxbill.com and other sites tied to it are not legitimate online pharmacies.

''Ninety-nine percent of Internet pharmacies are not legitimate,'' John Horton said. “And a lot of Web sites, just like the one that it appears sold drugs to this woman, are nothing more than Internet drug pushers.”

Click here to see the LegitScript.com blog post on this story.